The report showed permits rose 3.2 percent to a 620,000 annual rate in August, the highest this year and a sign that construction may stabilize. Permits climbed in three of four regions, led by an 11.3 percent jump in the West. They climbed 6.3 percent in the Midwest and 3.3 percent in the Northeast.

The drop in construction last month was led by a 29 percent slump in the Northeast, which indicates the threat posed by Hurricane Irene may have prompted builders to pull back. The flooding caused by the storm means projects scheduled to begin in the region this month may also have been delayed, Bloomberg reported.

Starts dropped in two of four regions, with the South joining the Northeast in decline. They climbed in the Midwest and West.